The non-linear relationship between globalization, financial development and energy consumption: Evidence from BRICS economies

In the era of globalization, financial development plays a key role in socioeconomic and environmental development. However, its adverse consequences on human life, environmental hazards, and high energy consumption cannot be ignored. Thus, this study investigates the non-linear relationship between globalization, financial development, and energy consumption for BRICS economies. In doing so, we have applied second-generation tests to identify cross-sectional dependence in the data. Cross-sectional augmented Dickey-Fuller (CADF) and Cross-sectional Im-Pesaran Shin (CIPS) have been performed to find the stationary level of variables. The long-term equilibrium link between the investigated variables has been established in continuance using the Westerlund Cointegration test. The Dynamic Seemingly Unrelated Regression (DSUR) indicates that U-shaped relationships exist for financial development and globalization with energy consumption. Conversely, there is an inverted U-shaped relationship exist between economic growth and energy consumption in BRICS. The Dumitrescu-Hurlin panel causality test findings show that a unidirectional link runs from energy consumption to financial development, economic growth to energy consumption, and globalization towards energy usage. Important policy implications have also been discussed.


Introduction
Over recent decades, the relationship between financial development and energy consumption has been subject to intense debate among economists, researchers and policymakers [1][2][3][4].Energy is a crucial factor of production, and it drives socioeconomic growth and development on a global scale.Energy is considered a vital factor of economic growth, and the world has known its importance for over a century.However, its global consumption will likely increase by 35% between 2014 and 2035.Energy is the unalterable factor of industrial production, operation, and management activities worldwide.Conventional energy sources widely use industrial production as global economies, try to gain competitive advantage by increasing their production level together with international trade and economic development [5].
It is crucial to know high-energy consumption determinants in BRICS for several reasons.First, high energy consumption is a sign of increased productivity, bringing prosperity to these economies.Second, emerging economies are proliferating and trying to achieve rapid sustainable development growth and environmental sustainability [3,6].Therefore, coordinated actions have been required to meet the COP26 energy security agenda and the rising global energy demand and consumption.In this regard, most countries agree to consume energy efficiently, significantly reducing coal power and fossil fuel consumption to achieve carbon neutrality to global climate goals [7].The governments of BRICS economies need to make efforts in energy conservation policies.Industries and businesses need to treat energy conservation as an obligation, rather than taking it as an opportunity for organizational transformation and technological development.This is because of the belief that adopting energy conservation policies or reducing energy intensity may negatively impact financial development [8].The literature has shown that economic growth increases energy consumption [2,9,10] or decreases it [3] for different regions.
Financial development is comprised of and enhances a nation's stock market and banking activities.It improves a country's economic performance and financial system of economies.Moreover, the link between financial development and energy demand can affect energy policies in the long run [11].Financial development facilitates financial institutions, banking and domestic and foreign domestic firms in terms of financial goods and services provision [12].Karanfil (2009Karanfil ( , 2008) ) [13,14] argues that exchange and interest rates may impact energy prices by encompassing a financial variable to the model, such as liquid liabilities, domestic credit to the private sector or stock market capitalization.Sadorsky (2011) [11] categorized the energy demand and financial development relationship into three different channels: the direct effect, the business effect, and the wealth effect.First, during financial development, financial institutions stimulate high advances at low rates, which increases consumers' purchasing powers, and they can purchase more goods which consume high energy.Second, financial development assists foreign and domestic firms in the provision of easy availability of financial capital.The stock market development also facilitates the provision of additional funding, which may impact energy usage.Thirdly, the escalation in stock market activities may raise firm and consumer confidence and economic expansions, affecting energy demand.Thus, the effect of energy consumption depends on numerous driving forces, both direct or indirect.The immediate impact on energy consumption increases energy demand and comes from construction, business operations and instalment of new infrastructure [15].Expanding trade activities, financial development and technological advancement increase or reduce energy consumption globally [16,17].
Globalization is a universal phenomenon which has socioeconomic and political impacts on human life.It removes cross-border restrictions and connects the world's economies through trade openness, technology transfers, capital flow, investment opportunities, and cultural ties [4].It enhances financial development and trade, which can significantly impact economic growth.The rise in financial activities and economic expansion may have a favorable influence on energy consumption.Globalization facilitates economies to assist information, facilitate innovative production processes and new business practices, and bring knowledge to the host country, resulting in a reduction of energy consumption and environmental degradation [17].The nexus between globalization and energy consumption can be seen through the lenses of different channels, i.e., through composition effect, scale effect and the technique effect [18].Measuring globalization in the form of capital inflows and trade openness mitigates energy consumption by acquiring high energy efficiency and advanced technology in a region, which may boost economic growth [19].Hence, over recent decades, economists and academics have devoted their efforts to exploring the globalization-energy consumption nexus.The globalized world will affect total energy consumption due to the net impact of numerous factors, but globalization is but one disparate factor.The rise in income, economic production and trade restrictions and globalization push energy consumption upwards globally.The stateof-the-art shows the interaction between income and energy demand; consequently, globalization's expansion can be linked with the high usage of energy.Thus, the globalization-energy consumption nexus remains debatable (Shahbaz et al., 2018) [20] found that globalization and energy usage have a negative relationship in the UK and USA, yet in a separate analysis, Shahbaz et al. (2016a) [21] explained that increasing globalization leads to lower energy consumption; and recently, Saud et al. (2018) [6] found that an acceleration in globalization reduces energy demand.A small number of empirical works have investigated globalization and energy nexus [6,10,22,23].However, Padhan et al. (2020) [10] found that globalization has a diverse impact on energy consumption in OECD countries.
Industrial development raises domestic energy consumption due to the high usage of equipment and machinery.Therefore, it is crucial for socioeconomic development, and its adequate availability is essential for economic prosperity [23].It is a common belief that energy consumption rises rapidly with economic growth, urbanization, and industrialization.All these factors are closely related and drive high energy consumption [24], which is the main element of industrial production and economic development in the long run [25].
Apropos to choosing BRICS economies, the BRICS economies are the second most significant economies in the world, and they dramatically impact world economic development.As the world's most influential and emerging economies, the energy consumption rate in the BRICS economies also rises with economic growth.Additionally, BRICS economies are highly oil-exporting and their energy supply mix is highly dependent on coal and fossil fuels [26].The government and relevant authorities need to pay serious attention to taking steps to control high energy consumption.Thus, this research has better importance to be investigated empirically.Historically, the energy demand increases from 2000 to 2001 with an average growth rate of 5.6%.By 2013, the rise in energy consumption was noted as 3.5% [27].In the BRICS economies, China was the highest energy consumer, with global energy consumption in 2013 at 22%, which rose from 12% in 2000.Comparing the global energy consumption share from 2000 to 2013, these economies show significantly high consumption, from 25% to 40%.These economies cover 23% of world GDP, approximately US$16.92 trillion, and total world trade share of 18%, which is US$7.7 trillion in total trade volume.Over the last decade, this trade volume has doubled its share compared to the rest of the world.Currently, BRICS exports are 19% compared to global exports [28].The urban population in BRICS countries from 1995 to 2010 was estimated at 47.3 million, which is 47% of the total growth of the urban population at that time [29].Through this urbanization growth, the urban population has had a tremendous impact on implementing sustainable urbanization worldwide.Hence, we cannot ignore policy on urbanization, as proper implementation in these economies will contribute to sustainable development globally [30].
Given this brief background, the following are study contributions to the existing literature.First, this study is an attempt to discover the association between economic growth, globalization, financial development, and energy consumption for BRICS economies by incorporating industrialization, economic growth, and urbanization as explanatory variables to mitigate specification prejudice in the empirical model.Second, this study uses three diverse financial development measures, simultaneously providing linear and non-linear relationships in a single study with mixed models.This study will fill the gap in the literature and will contribute to the context of BRICS.Third, this study uses second-generation estimation approaches such as CIPS, CADF, Westerlund panel cointegration, DSUR & Dumitrescu-Hurlin panel causality tests to provide reliable results.In addition to these approaches, Sensitivity analysis, Pedroni panel cointegration and Driscoll-Kraay estimation are also used, which makes this study more robust and reliable.
The rest of the study is structured as follows.Section 2 addresses literature.Section 3 provides data sources and a model.Section 4 presents methodologies and empirical results.Section 5 concludes the paper and presents policy recommendations.

Literature review
Literature review has been divided into three sections based on the relationship among the variables.

Energy consumption and financial development
Increase in energy consumption is an important and urgent challenge facing the world today, affecting the survival and development of human beings in multiple dimensions, from the environment through to the economy.For emerging countries to better understand how future energy demand is changing, it is essential to understand the energy demand determinants.In the literature, numerous researchers have reported the connection between economic growth and energy consumption.However, the inclusion of financial development in the function of energy demand is imperative, as, by ignoring it, the estimation of energy demand will not be accurate [15,31].During a period of financial development, a strong financial system stimulates high debt provision at low cost to customers or borrowers, it facilitates easy capital provision, brings financial transparency among borrowers and lenders, and promotes foreign investment and energy consumption.Financial development posits a decreasing or increasing effect on energy consumption.It facilitates consumers with financial resources, which enhances their purchasing power, and consumers purchase big-ticket items, which consume high energy [11].Yet, in cases of high financial development, stable financial institutions spend heavily on advanced technology, energy efficient projects, and electronic appliances, which decrease energy consumption [32].
Recently, Mahalik et al. (2017) [3], and Ma et al. (2022) [41] reported the nexus between financial development, GDP, energy consumption, and urbanization, and found that financial development and urbanization increase energy demand, while economic growth mitigates it.Additionally, because of a one-way causal relationship from financial development to energy demand, they agreed that reducing energy consumption can reduce carbon emissions, thereby optimizing the human living environment.Similarly, Komal and Abbas (2015) [42] discovered the effect of urbanization, financial development, and GDP on energy usage in Pakistan over 1972-2012 by using the GMM technique and found that energy usage is enhanced due to financial development, urbanization, and economic growth.Liu et al. (2018) [43] reported similar results in China.Shahbaz and Hooi (2012) [44] analyzed the nexus between financial development, energy consumption, GDP, and urbanization in Tunisia from 1971 to 2008, using the ARDL approach and Granger causality, and reported that a long-term relationship exists among the variables.A feedback effect was reported between energy usage and financial development.Studies have also investigated the energy curse channeled through low human capital development in the long run.Their result revealed that renewable energy abundance negatively impacts human capital development, persistently, while technology, infrastructure, health, energy poverty and FDI in control [45].
In a panel setting, Saidi and Hammami (2015) [46] examined the nexus between energy consumption, economic growth and financial development in 58 countries from different regions between 1990 and 2012 and observed a favorable connection between FD-EC and GDP-EC.Sadorsky (2010) [15] studied the financial development-energy consumption relationship by employing a generalized method of moments (GMM) technique during 1990-2006 and found that, when a stock market indicator has been utilized to evaluate financial development, a positive or direct relationship exists in 22 different emerging countries.Further, Furuoka (2015) [37] observed the relationship between energy usage and financial development for 12 different Asian countries over the period 1980-2012, finding that a long-term relationship occurs between variables, while unidirectional causality occurs from energy usage to financial development.C ¸oban and Topcu (2013) [47] probed the effect of financial development on energy usage in 27 European Union countries from 1990 to 2011 by employing a GMM model and found an insignificant relationship.In addition, a financial developmentenergy usage nexus exists in old members, and it is independent of how financial development is measured.However, it has a significant relationship when measured with bank index and insignificant impact when measured as a stock index in new members of European Union countries.Topcu and Payne (2017) [24] examined the FD-EC relationship by using different measures for financial development in 32 high income countries.They probed how only the stock market index significantly decreased energy consumption, while other measures showed an insignificant Ahmed (2017) [48] studied the influence of financial development and economic growth on energy usage for BRICS countries over the period 1991-2013.They found that energy demand increased initially due to GDP growth and financial development and eventually it decreased.Unidirectional causality exists between economic growth towards energy consumption and two-way causality presents between financial development and energy consumption.Another study by Baloch et al. (2019) [49] obtained similar findings in selected OECD countries.The impact of financial technology on renewable energy and carbon emissions has been investigated using MSCI developing countries and the result of the study shows that financial technology development stimulates renewable energy resource consumption and discourages carbon emissions and also has positive impact on economic growth [50].Farhani and Adebola (2017) [36] probed the long-run relationship between financial development, energy demand, and economic growth by using LM unit root and Bayern Hanck cointegration over 1973-2014 in the United States.They used quarterly data and found that the reduction of energy demand is due to economic growth and financial development.The literature thus presents different results for different panel studies.
In a causal association, Khan et al. ( 2014) [51] analyzed the causal relationship between energy consumption, economic growth, and financial development for South Asia and probed how co-integration presents among these variables.A feedback effect exists between EC-GDP both in the long and short term.The same outcome is documented for the financial development-energy usage relationship.Similarly, Kahouli (2017) [23] examined the causal impact across energy use, economic growth and financial development between 1995 and 2015 for six South Mediterranean countries by using different techniques (ARDL, VECM) and found the long-term relationship between these determinants and reported that all determinants have short-run unidirectional causality except in Egypt.Al-Mulali and Binti Che Sab (2012a, b) [52,53] investigated the long-term relationship and found causality between financial development, economic development, and energy consumption in 19 different African countries during 1980-2008 by employing co-integration and Granger causality test.They revealed that energy consumption has an impact on economic and financial development in the long run and a positive short-run causal relationship.Similarly, Tang and Tan (2014) [54] also studied the causal relationship among these variables for Malaysia over 1972-2009 and reported the same results.The conclusion is that different results are offered by different studies.

Energy consumption and globalization
It is clear from the selected but extensive literature that many researchers have analyzed the interaction between financial development and energy usage.However, we have tried to extend the literature in this study by introducing globalization, as there are only a few studies to date, and to the best of our knowledge, that have been conducted.In an in-country-based investigation, Shahbaz et al. (2016a) [21] explored the relationship between energy consumption and globalization by incorporating financial development, urbanization, and economic growth in India by employing Bayer and Hanck (2013) [55] and an ARDL approach over 1971-2012.They pointed out that energy demand decreases due to globalization and financial development, while urbanization and GDP growth increases energy demand.Saud et al. (2018) [6] examined the FD-EC relationship in China by employing the ARDL approach over 1980-2016.They documented the enhancement of energy usage due to financial development, while it decreases due to globalization.Others found that urbanization increase energy consumption and environmental deterioration [56].
In panel countries analysis, Koengkan (2017) [57] investigated the effect of GDP growth and globalization on energy usage over 1991-2012 in 12 different countries from the Caribbean and Latin America by using the ARDL approach.It is reported that the consumption of energy can be increased due to an increase in globalization in the long-term, but meanwhile economic growth positively affects energy consumption both in the long and the short run.Shahbaz et al. (2018) [20] probed the impact of globalization on energy usage in Ireland and the Netherlands over the period of 1970-2015 measured quarterly.They employed a quantile autoregressive distributed lag model (QARDL) and revealed that globalization affects energy consumption positively in these countries.In another study, Shahbaz et al. (2018b) [58] explored the globalization-energy usage relationship for Brazil, India, China, South Africa, and Russia.They revealed that globalization has positive influence on energy consumption for South Africa and Brazil, but a negative impact for India, Russia, and China.In a causal relationship, Shahbaz (2017) [59] explored the causal impact between globalization and energy usage in 25 different countries from North America, Asia, Oceania, and Western Europe over 1970-2014 and reported that in some countries globalization positively impacts energy consumption while some are negatively co-related.It is also reported that a one-way causality relationship occurs from globalization to energy usage.

Urbanization and financial development
Urbanization is essential for the growth of the economy.Urbanization encourages financial development to promote investment activities.A long-run, one-way causality relationship exists between GDP and energy usage.Mahalik and Mallick (2014) [60] conducted a study for India between 1971 and 2009 on the nexus between economic growth, financial development, urbanization, and energy consumption.The ARDL approach was used, and they concluded that the consumption of energy decreases due to financial development and GDP growth, while urbanization-energy usage has a positive relationship.Destek (2015) [61] studied the nexus between economic growth, financial development, and energy consumption in Turkey in 1960-2011 by performing a Maki cointegration test and Granger causality test.They probed how financial development mitigated energy consumption, while GDP stimulated energy consumption in the long term.A bidirectional causal relationship exists between economic growth and energy consumption, and a one-way causality relationship occurs from financial development-energy consumption.The conclusion from the above literature for countrybased studies is that different studies provide blended and mixed results for different regions and countries [3,62,63].In this study we are applying linear and non-linear models through more robust and advance techniques to confirm this relationship.Other studies found that, the financial development increase energy consumption and environmental deterioration [17,64,65].
Summing up the above literature review, it is clear from the prior studies that diverse results are offered by these studies at different times for different regions and countries.Therefore, further study in the context of panel BRICS countries will contribute to the existing literature more deeply.

Variable description, data source and model specification
In this empirical study, we estimate panel data for BRICS countries from 1999 to 2017.The selection of time period is due to unavailability of data for the most recent period.In order to evaluate financial development, most researchers use domestic credit provided to the private sector [36,66,67], but in this study, we have used three indicators for financial development: domestic credit provided to the private sector (DCPS), domestic credit by the banks (Bank) and stock traded value (Stock) [68].Data for these measures have been borrowed from the global financial database [29].For measurement of globalization, we use the globalization index [69].The KOF globalization index comprises economic, political, and social globalization.Actual flows and restrictions are two sub-indices of economic globalization: these account for 36% of total globalization.Social globalization is divided into three sub-indices: data on information flows, data on personal contact, and data on cultural proximity, which account for 37% of total globalization, while political globalization accounts for 27% of total globalization.Energy usage, defined in kg of oil equivalent [70] and GDP constant to 2010 US prices are used for economic growth.We divided the energy usage and GDP growth with the total population to find the per capita measure.Urban population (the percentage of the total population) is used as a proxy for urbanization.Industry value, added as a percentage of GDP, is used for industrialization [71].The World Bank website has been used to collect the data of these variables.We describe variables and the source of data in Table 1.[21,44], this empirical study seeks to find the interaction between globalization, economic growth and financial development indicators with energy consumption in BRICS countries by including industrialization and urbanization in the energy consumption function.The functional model is presented as follows.

EC ¼ f ðFD; GLOB; GDP; URB; INDÞ ð1Þ
These variables have been converted to logarithmic form, as they give consistent results [72].So the above equation can be written as where  [3] came to the conclusion that financial development enhances energy consumption in early stages by allocating financial resources to manufacturing industries.After achieving a certain level, energy usage declines, as the financial institutions manage their financial resources, so that this should be allocated to the industries which use advanced technology and hence energy consumption decreases.The globalization-energy consumption relationship is also ambiguous: it may be positive or negative [28].Globalization affects energy consumption through scale effect, technique effect and composition effect.Through scale effect [18], globalization can boost economic activities which increase energy consumption.By technique effect [19], globalization enables companies to use advanced technology, which reduces energy consumption, while, through composition effect [73], energy consumption decreases because of the growth of economic activities.It is also argued by Jena and Grote (2008) [74] that, through globalization, economies shift their production activities from manufacturing to the service sector.Hence, energy consumption decreases by modifying their production methods.This leads us to integrate non-linear terms of economic growth, globalization, and financial development to explore the relationship between globalization, economic growth, and financial development with energy usage as either U-type or inverted U-type.The non-linear model is presented as follows: where FD 2 , GLOB 2 , GDP 2 represents the square of financial development, globalization, and GDP, respectively.β 6, β 7, and β 8 represent estimation coefficients of GDP 2 , FD 2, and GLOB 2 , respectively.If β 3 >0, β 6 <0, then the association between economic growth and energy consumption shows an inverted U-shaped relationship, and otherwise is U-shaped .The association between globalization and energy consumption is an inverted U-shaped relationship if β 2 >0, β 8 <0, otherwise it is U-shaped.If β 1 >0, β 7 <0, then the financial development-energy consumption nexus is inverted U-type, otherwise it is U-type.DCPS, Bank, and Stock have been used as financial development indicators in the above linear and non-linear models.

Econometric methodology and empirical results
Before going to the main results, we discuss the summary statistics of analyzed variables which are presented in Table 2.The statistics show that the mean range of energy consumption varies from 2.67825 in India to 3.67825 in Russia.The industrialization mean range varies from a maximum 1.661185 for China to a minimum 1.421675 for Brazil.In respect to FD, Russia shows the minimum mean values 1.38630, 1.38620, and 1.07674, when measured by DCPS, Bank and Stock, respectively, while the maximum values are 2.12938, 1.82872, and 1.67987, indicating that South Africa is the financially developed country.The mean range for urbanized population varies from 1.46680 in India to 1.91664 in Brazil.In regard to GDP per capita, India is the poorest country (2.99996), whereas Brazil is the richest one (3.99263).Finally, in globalization, the mean value varies from Russia (4.186235) to India (3.864560).This implies that Russia is the most globalized country, whereas India is the least globalized in the selected panel.Moreover, South Africa has the lowest variations in GDP per capita, energy consumption, and all the evaluations of financial development except domestic credit provided to the private sector, while Brazil has the least fluctuations in globalization.China has the least fluctuation in domestic credit provided to the private sector and industrialization, but high fluctuations in energy consumption, urbanization, economic growth per capita and globalization have been recorded.India has the highest variations in stock traded value.Russia has high fluctuations in domestic credit provided to the private sector, domestic credit provided by the banks, industrialization and least fluctuation in urbanization.Besides this, the values of skewness and kurtosis show that the data is normal [75].This study points out the linear and non-linear relationships for BRICS countries.These countries are connected through economic and financial relations.The economic factors of one country may influence other countries.Therefore, to avoid the misspecification of the model or the biases of empirical results, we must consider these effects in the model by applying the cross-sectional dependence tests.In this research, we employed a Lagrange multiplier test (CDLM) proposed by Breusch and Pagan (1980) [76] for cross-sectional dependence.When period (t) is greater than (n) cross-sections, this test produces more consistent and reliable results.Statistically, the CDLM test is as follows: where t is the period, n shows the size of the sample and ρ ik indicates the estimation of crosssectional correlation error of country i and k.The following test results (CD) presented by Pesaran (2004) [77] are also useful to examine the cross-sectional dependence.It is reported that cross-sectional dependence occurs among all countries in panel BRICS, which is presented in Table 3.This suggests that a shock that occurs in one country could spread to other BRICS nations.

Panel unit root and their results
We have used cross-sectional augmented Im-Pesaran-Shin (CIPS) and cross-sectional augmented Dickey-Fuller (CADF) unit root tests established by Pesaran (2007) [78] to find stationary properties in the variables.These second-generation panel unit root tests are more reliable and robust under the cross-sectional dependence.The equation for the dynamic linear heterogeneous model is; where X t-1 is the lagged level cross-sectional average and ΔX t is the first difference individual series.
A modified form of Eq (3), which is (CIPS) suggested by Pesaran (2007) [78].Gengenbach et al. (2010) [79] defined (CIPS) as: where CADF i indicate the cross-sectional augmented DickeyFuller statistic for the i th crosssectional unit.Table 4 shows the CADF and CIPS panel unit root tests results, and it is reported that globalization is stationary at a level in CIPS.In CADF, energy consumption, DCPS, Bank, energy consumption and globalization are stationary at a level, while all variables are stationary at first difference for both CIPS and CADF.In addition, it shows that variables have integration of order one.Therefore, cointegration coefficients for these variables can be investigated.

Westerlund panel cointegration test results
After checking the stationary properties in variables, we have to determine whether the longterm relationship among variables exists or not.In order to find cointegration between urbanization, GDP, Industrialization, energy consumption, globalization, and financial development, we have used the Panel Cointegration Test proposed by Pedroni.The Pedroni Panel Cointegration Test gives four statistics, namely, panel rho-statistics, panel v-statistics, panel PP-statistics and panel ADF statistics.These statistics consider heterogeneity across countries.Group statistics provide group PP-statistics, Group rho-statistics and Group ADF-statistics.Panel tests are based on a within-dimension approach, while Group tests are based on betweendimension approaches.In addition to Pedroni Panel Cointegration, we apply Westerlund Panel Cointegration (Westerlund, 2007) [80], which accounts for cross-sectional dependence, which is more reliable.This test will be helpful to find the reliable and robust results regarding cointegration.Table 5 presents Pedroni Panel Cointegration Test results.Table 6 shows Westerlund Panel Cointegration Test results.Both tests reported that the models with DCPS, Bank, and Stock were used for financial development; it rejects the null hypothesis of no co-integration at 1% significance level.Therefore, it confirms that urbanization, economic growth, energy consumption, globalization, industrialization, and financial development indicators are cointegrated.In other words, it suggests a long-run equilibrium relationship over the period of 1999-2017 in BRICS economies.

The long-run estimation
The long-run coefficients should be estimated as the next step, after rejection of the null hypothesis of no co-integration among variables.Ordinary least square estimation can cause spurious results in the presence of a unit root.Therefore, a long-term estimation method, Dynamic Seemingly Unrelated Regression (DSUR), created by Mark et al. (2005) [81], was used to explore the linear and non-linear relationship between economic growth, financial development indicators, and globalization with energy consumption in BRICS economies, along with urbanization and industrialization.If the panel data is balanced and period (T) is greater than the number of cross-sections (N) accounting for cross-sectional dependence, the DSUR test is more suitable.In addition, it is flexible in cases where the co-integrated variables are homogeneous or heterogeneous.Mark et al. (2005) [81] used a series of Monte Carlo experiments to assess the performance with other methods.To control the endogeneity problem, they initiated asymptotic theory established for DSUR, which includes a finite number of leads and lags.Therefore, when equilibrium errors are correlated across co-integrating regressors, it works well [82], compared to other tests (FMOLS, DOLS).Table 7 reports the DSUR approach results.Since the values used in this investigation are logarithmic of analyzed variables, the coefficient estimates of financial development indicators, the square of these indicators, GDP, GDP 2 , GLOB, GLOB 2 , URB, and Industrializationare econometrically equal to the elasticities of energy consumption in regard to the analyzed independent variables.It is significantly more important to note that all the variables are statistically significant in all the models.The linear model results reveal that energy consumption increases due to the increase in globalization.It implies that a 1% increase in globalization causes 0.62017%, 0.36711%, and 1.1081% increase in energy consumption, in Models 1, 2, and 3, respectively.In other words, globalization stimulates energy usage in BRICS economies.
Our result is consistent with Shahbaz (2017) [59] in panel data of 25 developed countries and Koengkan (2017) [57] in 12 countries from the Caribbean and Latin America, but not in line with Saud and Chen (2018) [6] in China.One possible reason underlying the positive relationship between GLOB-EC may be the lack of advanced technology and efficient energy sources.An increase in globalization stimulates industrialization, and, in turn, this increases energy demand.The establishment of new firms and industries can boost energy consumption.Further, it is not surprising that globalization causes high energy consumption, as trade with international communities rises, there are energy demands for high capacity of merchandise production in the regions.
(EC) Energy consumption is the dependent variable.The coefficient of economic growth in regard to energy consumption is significant and positive in the long-run linear relationship.This conclusion suggests that rising economic growth is accompanied by rising energy consumption.In other words, an increase in economic growth by 1% will lead to raised energy use by 1.8688%, 2.6047%, and 1.4579%, respectively in Model 1, 2, and 3, respectively.The results are consistent with Komal and Abbas (2015) [42] in Pakistan, Koengkan (2017) [57] in 12 countries from the Caribbean and Latin America, Destek (2015) [61] in Turkey, Saidi and Hammami (2015) [46] in 58 countries, Al-mulali and Lee (2013) [34] in GCC and (Nasreen and Anwar, 2014) [83].Conversely, the finding is not consistent with Shahbaz et al. (2017a) [84] in India, Farhani and Adebola (2017) [36] in the United States, and Mahalik et al. (2017) [3] in Saudi Arabia.The direct relationship between GDP and energy consumption may be due to several possible reasons.The first possibility may be due to the lack of enough resources for production purposes in these economies.Efficient production requires enough resources, such as advanced production technology, efficient energy sources, and unfinished materials.This indicates that these economies may lack efficient production techniques or efficient energy technology which boosts energy consumption during production.Secondly, the industry sector of these economies may not bring new energy sources and fresh techniques for production and energy consumption.
In regard to the financial development indicators, i.e., DCPS, Bank, and Stock, these are negative and significant.Table 6 shows that, if financial development (DCPS, Bank, and Stock) increases by 1%, this can lower energy consumption by 0.38627%, .78419and 0.27039%, respectively, in linear models.More precisely, these financial developments adversely impact on energy consumption.These results are in line with Destek (2015) [61] in 17 emerging economies, Topcu and Payne (2017) [24] in 32 countries, Abbasi and Riaz (2016) [85] in Pakistan (a reduced sample) and (Firdousi, Afzal, and Amir, 2023) [50] in 26 Morgan Stanley Capital International (MSCI) developing countries.The results are not in alignment with Abbasi and Riaz (2016) [84] in Pakistan (the full sample), Liu et al. (2017) [43] in China, and C ¸oban and Topcu (2013) [47] in EU (new members).This shows that these financial sectors are positively contributing to energy efficient projects in the regions.The possibility underlying the tendency of the positive effect of financial development on energy consumption is that, during periods of strong financial systems, financial institutions provide easy debt with low costs for renewable energy efficient projects.This tendency stimulates the production of renewable energy sources and induces high-energy-efficient technologies.The expansion in financial resources boosts purchasing power along with technological advancement, rather than using outdated high-energy-consumption energy appliances, and thus it reduces energy consumption.
In regard to urbanization, the results found that urbanization and energy consumption have a significant negative relationship in all models.This implies that the reduction in energy use is due to an increase in the urbanization process in the long run.Our outcomes are in line with Li and Lin (2015) [86] in low-income group countries and Bilgili et al. (2017) [87] for India and China.This finding shows that, with an increase in urbanization, a new process develops, and it consumes energy more productively by using advanced technology.Investment in research and development (R&D) related projects and the introduction of advanced technology can mitigate energy consumption.The research found that R&D enhances economic growth in the BRICS and played a catalyst role for innovation, and technological progress which leads into high economic growth [88].Research and development is one of the critical elements towards new knowledge and innovation in efficient energy production and energy transformation through the investment in R&D by the energy sector of BRICS economies.However, the responsible authorities and the policymaker needs to provide optimal allocation of R&D funds in the overall R&D budget as well as in the energy sector [89].It is because most of the BRICS economies are highly oil-exporting and their energy supply mix is highly dependent on coal and fossil fuels which is core component of industrialization [26].The elasticities of industrialization with respect to energy consumption show a significant and positive sign for all models.This implies that, by increasing industrialization, the demand for energy also increases.In other words, these countries are in the mid-industrialization stage (change from light to energy-intensive industries), so the process of industrialization increases energy consumption.This result is consistent with Sadorsky (2013) [71] in 76 developing countries, and Shahbaz and Lean (2012) [44] in Tunisia.
In addition to linear models, non-linear relationships are also investigated.The coefficient estimates of GDP and GDP square are positive and negative, respectively, in all the models, indicating the inverted U-type relationship between GDP-EC.It suggests that a 1% increase in income tends to raise energy consumption by 4.89%-7.996%,while the negative sign of GDP 2  shows that, after achieving a certain level of economic growth, it can start to decline.Regarding financial development indicators, the sign of the coefficient estimates of financial development indicators (DCPS, Bank, Stock) and the square of these indicators are found to be negative and positive, respectively.These signs show that the U-type relationship exists between DCPS, Bank, and Stock with energy consumption.It implies that energy consumption decreases in early stages due to financial development, while, after approaching a certain level, the usage of energy tends to be increased.While discussing the non-linear relationship between globalization and energy consumption, the coefficient estimates of GLOB and GLOB 2 is negative and positive, respectively, in all three models.Thus, it also shows that a U-shaped relationship exists between globalization and energy consumption.In the early stage, one point rise in globalization increases energy consumption by 0.617 points; later, a one-point increase in globalization tends to reduce energy consumption by 36.311points.The logical reason behind this phenomenon can be explained as an increase in globalization increases the inward flow of outdated and energy-intensive technology through foreign direct investments and international trade.The outdated technology and industries increase consumption, and it increases high energy demand in the region.Later, after a threshold point, through foreign direct investment and technological trade, the selected economies may adopt advanced and energy-efficient technology and complex production industries with high knowledge and skills in the region, which enhance energy efficiency and reduce energy consumption, establish U-shaped relationship.Our finding support the findings of Shahbaz et al., (2019) [90] for Global sample.Unlikely, Huang et al., (2020) [22] found the inverted relationship between energy and globalization, whereas Acheampong et al.,(2021) [91] found that there is no effect on energy consumption by increase in social, economic and political globalization in 23 emerging economies.
It is notable to mention that we have made three models by employing three indicators of financial development (DCPS, Bank, Stock), to assess the robustness of the outcomes.In addition, the Driscoll and Kraay (1998) [92] estimation technique for long-run results has also been used.Table 8 shows the Driscoll Kraay panel long-run results.All the results drawn from these models and techniques provided similar results, as the coefficients, along with all the models, bearing similar signs with different coefficients.Thus, the result drawn from this empirical work is more robust and reliable.

Panel granger causality
In this study, the second-generation form of Granger causality test, heterogeneous panel Granger non-causality test (Dumitrescu and Hurlin, 2012) [93], has been used, as this is more suitable, if T period is higher than N cross sections.The model for panel causality is: where α i represents slope intercept, γ i & βi shows slope coefficients, k indicates lag length numbers.Table 9 depicts the causal results.The evidence drawn from this estimation approach provides the causality direction between the variables, for better and more appropriate policy implications.Table 7 shows the growth effect between energy consumption with Industrialization, DCPS, and Bank.It implies that industrialization and financial development occurs by consuming high energy.A unidirectional causal link is found between globalization and energy usage [6].A conservation effect is found between GDP and energy consumption [94,95], and Stock with energy usage, while the feedback effect is found between energy consumption and urbanization [34,43].In addition, a unidirectional relationship exists from Globalization towards DCPS and Bank, GDP to Stock, Stock to Urbanization, and Urbanization towards GDP, DCSPS, and Bank.Bidirectional causal relationships exist between GDP with DCPS and Bank, Similar results are found by prior literature [34,31,96].Two-way causality exists between Globalization and Urbanization, GDP with Urbanization and Urbanization with Industrialization.

Conclusion and policy recommendations
This paper sets out to estimate the relationship between economic growth, globalization, financial development, and energy consumption, along with urbanization and industrialization, in BRICS economies over the time span 1999-2021.To this end, a number of econometric series were employed, i.e., the cross-sectional dependence test (CDLM), the panel unit root (CIPS and CADF), the Westerlund panel cointegration test, the DSUR for long-run estimation, and the Dumitrescu-Hurlin panel causality test.
Empirical results confirm the long-run equilibrium relationship between variables.The long-run estimation (DSUR) results indicate the inverted U-shaped relationship between economic growth and energy consumption, while a U-shaped relationship exists between globalization, financial development, with energy consumption, which indicates the increase in energy demand after achieving the threshold level.Urbanization decreases energy consumption, and industrialization stimulates it.The Dumitrescu-Hurlin causal relationship shows that one-way causality exists from energy consumption to financial development (DCPS, Bank), globalization towards energy usage, Stock to energy usage, and GDP to energy consumption.
The study puts forward some important policy implications, based on its results.Financial development and globalization are positively contributing in efficient energy use.Therefore, more expansion in the globalization process and financial development is needed.Moreover, to formulate the energy conversation policies and strategies, policymakers should include globalization and the above-mentioned financial development indicators in the energy consumption function, since ignoring these determinants will result in not meeting targets to reduce energy consumption.Urbanization reduces energy consumption, which implies that the concentration of people in these countries is likely to generate economies of scale.Therefore, this depends on their economic and social infrastructure.Hence, if the government wants to benefit from these economies of scale, it should improve the economic and social infrastructure in the major cities of BRICS countries.
In addition, as economic growth and industrialization are the main punter behind high energy consumption, policymakers should therefore focus on efficient energy sources, such as renewable energy sources.Investment in R&D-related projects and the introduction of advanced technology into BRICS economies can mitigate energy consumption.The research found that R&D enhances economic growth in the BRICS.R&D is a catalyst for innovation, and technological progress brings high economic growth [88].R&D is one of the critical elements towards new knowledge and innovation in efficient energy production and energy transformation through the investment in R&D by the energy sector of BRICS.However, the responsible authorities and the policymaker may provide optimal allocation of R&D funds in the overall R&D budget as well as in the energy sector [89].It is because most of the BRICS economies are highly oil-exporting and their energy supply mix is highly dependent on coal and fossil fuels [26].Thus, the government and relevant authorities need to pay serious attention to taking steps to control high energy consumption.

Limitations and future research directions
There are limitations in the study in that it is focused only on BRICS countries, and so the findings cannot be generalized uncritically to other countries.We therefore recommend that future researchers examine the nexuses between globalization, financial development, and energy utilization using a global sample.Furthermore, this study explored the U-shaped relationship between globalization, financial development, and energy consumption, and so this study used aggregate energy consumption.Future research will be more beneficial if renewable energy is used along with the selected variables.Moreover, by using three proxies of globalization (economic, social, and political), such research could provide a more in-depth view for policymakers.
Fig 1 shows the box charts of the main

Table 2 . Summary statistics of all BRICS country's log variables.
https://doi.org/10.1371/journal.pone.0293890.t002variables(EC, GLOB, GDP, DCPS, Bank and Stock) with scatter plot and distribution overlays.Each box plot shows 25/50/75 percentiles, whisker caps denote 1/99 percentiles, Square represents mean values, and the dots show the minimum and maximum values.To validate the estimation models, different sensitivity analysis has been done which is shown in Appendices.S1 Table in S1 File depicts the correlation results, S2Table in S1 File shows variance inflation factor results, and S3 Table in S1 File presents the heteroskedasticity results.